Whether you run a not-forprofit organization or a corporate firm, improving the bottom line is always first and foremost, and new research shows there’s an easy way to improve an organization’s finances: Appoint more women to the board.
A study conducted by Catalyst, a New York-based nonprofit that works for women’s inclusion in the workforce, and published in the Harvard Business Review found that Fortune 500 companies with the highest representation of female board directors enjoyed much higher financial performance, on average, than companies with the lowest representation of women board directors.
According to the Harvard Business Review, “Experts believe that companies with women directors deal more effectively with risk. Not only do they better address the concerns of customers, employees, shareholders and the local community, but also, they tend to focus on long-term priorities. Women directors are likely to be more in tune with women’s needs than men, which helps develop successful products and services. After all, women drive 70 percent of purchase decisions by consumers in the European Union and 80 percent of them in the United States.”
To Marina Gomberg, who is finishing a term as chairperson of the Equality Utah board of directors, the findings make perfect sense. “It makes sense to have boards be representative of the population or community you’re trying to serve,” she said. “If we assume the goal is to be successful, which is a safe assumption, then we have to understand the need to meet it and we all understand our own needs better than anyone else.” According to the Catalyst study, more women serving on corporate boards also paves the way for more women serving in top leadership positions within organizations, another benefit to the bottom line.
That long-term goal of creating more opportunities for women to advance their personal and professional goals is what motivates Holly Yocom, who works as associate director of community services for Salt Lake County, to make the commitment of time and energy to serving on boards for organizations including the Salt Lake City Library, Planned Parenthood, the Central Utah Art Center and Discovery Gateway.
“It is hard — especially that family balance — but the more that women can say, ‘I need to do this for not just myself but for my family,’ the more it will do for generations and generations to come,” Yocom said. “The more that women can get involved and take on leadership roles, the more natural it will become.”
Both Gomberg and Yocom agree that any number of factors could be at play in preventing women from participating on boards, including opportunity, time and worrying they don’t have anything unique to contribute.
“Locally there is a culture where women don’t hold the highest levels of leadership and I think that permeates into companies and boards,” Gomberg said. “As someone who has been surprised that someone would believe in me as a woman, I can see how other women wouldn’t have confidence in their ability to have leadership roles.” Yocom recommends people seek out opportunities that match their passions and interests.
“My biggest motivation would be the community service that comes with being on a board,” she said. “Whether it’s a nonprofit, corporate or government board, it’s all different types of service that I find really fulfilling. I’m willing to give my personal time for the things I get back.” Some opportunities have come to her as a result of her employment or other community connections, Yocom said, but others she has sought out. Gomberg said women should be bold in making opportunities for themselves to serve and lead.
“It’s not that you have to be this fearless person to sit on a board; you just have to be courageous. Be courageous and step into those roles anyway,” she said. And people already in leadership roles should be courageous in using their platform to promote diversity in their organizations. “To have one woman is better than none, but to have a diversity of women better allows you to serve the community you’re aiming to serve,” Gomberg said.
The research backs her up. According to the Catalyst study, the presence of at least three women is necessary to change boardroom dynamics. More women on boards also creates a bigger pool of candidates for organizations to draw from for critical inhouse management and leadership roles.
“Clearly, financial measures excel where women serve on corporate boards,” said Ilene H. Lang, president of Catalyst. “This Catalyst study again demonstrates the very strong correlation between corporate financial performance and gender diversity. We know that diversity, well managed, produces better results. And smart companies appreciate that diversifying their boards with women can lead to more independence, innovation, and good governance and maximize their company’s performance.”
The research is so compelling that some people are literally taking it to the bank. Several portfolios now allow investors to invest in women’s leadership, including the Pax Ellevate Global Women’s Index Fund, Barclays Women in Leadership Total Return Index and Morgan Stanley’s Parity Portfolio.
But, as obvious as the benefits are, biases and cultural barriers still need to be overcome and women are just as responsible to help that happen as anyone else.
“We have to be participatory in change,” Gomberg said. “We can’t expect it to happen around us.”